Howard Hotels Ltd. (HOWARDHOTELS) - Director Report

Company director report

Your Directors have pleasure in presenting the Twenty Seventh Annual Report ofthe Company together with the Audited Accounts for the year ended 31st March2016.

FINANCIAL HIGHLIGHTS

The Performance of the Company for the financial year ended 31st March 2016is summarized below:

(Rs. in Lakhs)

PARTICULARS

CURRENT YEAR

PREVIOUS YEAR

(2015-16)

(2014-15)

1. Total Income

817. 75

947.96

Less: i) Operating Administrative & other Exp.

750.06

832.39

2. Earning before interest and depreciation

67.69

115.57

Less: i) Interest

9.72

25.67

ii) Depreciation

64.82

68.14

3. Profit before Tax

(6.84)

21.76

Less: provision for Tax

i) Current

-

4.15

ii) Deferred

(8.54)

4.74

iii) Earlier year Tax

-

0.05

iv) MAT Credit

-

(4.15)

4. Profit after Tax

1.70

16.97

Add: Balance of Profit as per last Balance Sheet

308.53

299.47

Less: Adjustment of depreciation on account of change in estimated life of

-

7.91

fixed assets

5. Balance available for appropriation

310.23

308.53

COMPANYS PERFORMANCE

During the year under review the Company has total revenues of 817.75 Lakhs ascompared to 947.96 Lakhs during the previous year. The net profit for the year underreview has been 1.70 Lakhs against 16.97 Lakhs during the previous year. Your directorsare continuously looking for avenues for future growth of the Company in Hotel Industry.

DIVIDEND

The Company has decided to plough back its entire profits for future developments.Hence no dividend is recommended for the year under review.

RESERVES

The appropriations for the year are:

(Rs. in Lakhs)

PARTICULARS

CURRENT YEAR (2015-16)

PREVIOUS YEAR (2014-15)

Securities Premium A/c as per last Balance Sheet

40.50

40.50

Addition during the year

-

-

(a_

40.50

40.50

Balance in P&L A/c as per last Balance Sheet

308.53

299.47

Addition during the year

1.70

16.97

Adjustment of depreciation on account of change in estimated life of fixed assets

Particulars of contracts Or arrangements with related parties referred to in Section188(1) of the Companies Act2013 in the prescribed form AOC-2 is appended as Annexure-III to the Board's Report.

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions. The Policy onmateriality of related party transactions and dealing with related party transactions asapproved by the Board may be accessed on the http://www.howardhotelsltd.com/OtherReports/Policy on Related Party Transactions

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.

ACCEPTANCE OF DEPOSITS

The Company has not accepted any deposits from public within the meaning of Section 73of the Companies Act 2013 and the Companies (Acceptance of Deposit) Rules 2014 duringthe year under review.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed as Annexure - I and formsan integral part of this Report.

MEETINGS OF THE BOARD

During the financial year ended March 31 2016 06 (Six) meetings of the Board wereheld as follows :

Dates of Board Meeting

Board Strength

No. of directors present

01. April 29 2015

6

5

02. May 29 2015

6

5

03. August 3 2015

6

5

04. November 6 2015

6

5

05. February 5 2016

6

4

06. March 112016

6

4

*The maximum time gap between two meetings was not more than 120days.

CODE OF CONDUCT

The Companys Code of Conduct as adopted by the Board of Directors is applicableto all Directors Senior Management and Employees of the Company. The Code of Conduct ofthe Company covers substantial development disclosure of material information integrityof financial reporting continuous improvement of the internal control system and soundinvestor relations. The same can be assessed at http://www.howardhotelsltd.com/reports/1434531313CodeofConduct.pdf

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and separate its functions of governance andmanagement. As on March 31 2016 The Board consist of 6 members three of whom areexecutive/whole-time directors and three are independent directors. The Board periodicallyevaluates the need for change in its composition and size.

The policy of the Company on director's appointment and other matters provided undersub section 3 of section 178 of the Companies Act 2013 can be assessed at http://www.howardhotelsltd.com/Other Reports/Policy for Selection ofDirectors and Determining Directors independence.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he / she meets the criteria ofindependence laid down in Section 149(6) of the Companies Act 2013 and Regulation 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations").

The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of the criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The board and the nomination and remuneration committee reviewed the performance of theindividual directors on the basis of the targets/criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent directors performance of non-independentdirectors performance of the board as a whole and performance of the chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.

DIRECTORS AND KEY MANAGERIAL PERSON

Pursuant to the provisions of section 149 of the Act Mr. Rakesh Kumar Agarwal Mr.Ravi Kant Bansal and Mrs. Alka Agarwal were appointed as Non-Executive Independentdirectors at the annual general meeting of the Company. They have submitted a declarationthat each of them meets the criteria of independence as provided in section 149(6) of theAct and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.There has been no change in the circumstances which may affect theirstatus as independent director during the year.

Ms. Pritika Agarwal has resigned from the post of the Company Secretary &Compliance officer of the Company as on 29th February 2016.

Mr. Shri Kant Mittal retires by rotation and being eligible has offered himself forre-appointment in the ensuing AGM.

During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than the sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.

Ms. Gazal Mittal has been appointed as a Company Secretary of the Company w.e.f. 17thMay 2016.

The detail of no. of directorship of each director in other Public Company andmembership & chairmanship in the Companys Committees and other PublicCompanys Committees are as under:

Name of Director

Category

*No. of directorship in other public companies

In committees of the Company

**In committees of other public companies

Chairmanship

Membership

Chairmanship

Membership

Nirankar Nath Mittal

Executive

NIL

-

-

NIL

NIL

Nirvikar Nath Mittal

Executive

NIL

-

-

NIL

NIL

Shri Kant Mittal

Executive

NIL

-

-

NIL

NIL

Rakesh Kumar Agarwal

Independent Non-Executive

NIL

2

1

NIL

NIL

Alka Agarwal

Independent Non-Executive

NIL

-

3

NIL

NIL

Ravi Kant Bansal

Independent Non-Executive

NIL

1

2

NIL

NIL

*** The directorship held by directors do not include alternate directorship anddirectorship of foreign Companies section 8 Companies & private limited Companies.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act 2013 we hereby state:

i) .that in the preparation of the Annual Accounts the applicable accountingstandards have been followed along with proper explanation and that there are no materialdepartures;

ii) .that the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2016 andof the profit and loss of the Company for that period;

iii) .that the directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

iv) .that the directors have prepared the Annual Accounts on a going concern basis.

v) .that the directors have laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively.

vi) . that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

POLICY ON SEXUAL HARASSMENT OF EMPLOYEES

The Company has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of employeesat Workplace (Prevention Prohibition and Redressal) Act 2013 (India) and the Rulesthereunder. No complaints have been received on Sexual Harassment of employees inFY 2015-16. The policy can be assessed at http://www.howardhotelsltd.com/otherreports/SexualHarrassmentPolicv

AUDITORS AND AUDITORS REPORT STATUTORY AUDITORS

M/s. P. C. Bindal & Co. Chartered Accountants New Delhi the Statutory Auditorsof the Company are the retiring Auditors and being eligible offers themselves forre-appointment. The Certificate u/s 139(1) of the Companies Act 2013 has been obtainedfrom them and they are not disqualified for such re-appointment within the meaning ofSection 141 of the said Act.

The Board of Directors on the recommendation of Audit Committee has re- appointedM/s. P. C. Bindal & Co. Chartered Accountants as Statutory of the Company for thefinancial year 2016-17. As required under the Companies Act 2013 a resolution seekingmembers approval for the re-appointment of the Statutory Auditor forms part of theNotice convening the Annual General Meeting for their ratification.

There is no Audit qualification for the year under review.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed M/s Satyendra Sharma & Associates a firm ofCompany Secretaries in Practice (C.P.No.4843) to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report in Form MR-3 is annexed as Annexure - II andforms an integral part of this Report.

There is no secretarial audit qualification for the year under review.

INTERNAL AUDITOR

The Companys internal control system is commensurate with its size scale andcomplexities of its operations. The internal and operational audit is entrusted to CAChirag Jain & Co a reputed firm of Chartered Accountants. The main thrust of internalaudit is to test and review controls appraisal of risks and business processes besidesbenchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame.

The Audit Committee of the Board of Directors and Statutory Auditors are periodicallyapprised of the internal audit findings and corrective actions taken. Audit plays a keyrole in providing assurance to the Board of Directors. To maintain its objectivity andindependence the Internal Audit function reports to the Chairman of the Audit Committee.

REGULATORY ACTIONS

The following regulatory actions are pending as on date March 312016

Name of the Statute

Nature of Dues

Amount (Rs. in lakhs)

Period to which Amount relates

Forum where dispute is pending

Sales Tax Act

Sales Tax Demand

0.49

2012-13

Sales Tax Appellate tribunal

Provident Fund

Provident Fund Demand

9.19

01/04/1996 to 31/01/2014

Asstt. /Regional Commissioner Provident Fund

CASH FLOW ANALYSIS

The Cash Flow Statement for the year 2015-16 is annexed with the Annual Accounts of theCompany.

EXPLANATIONS / COMMENTS BY BOARD OF DIRECTORS ON ADVERSE REMARK MADE BY AUDITOR

There are no qualifications reservations or adverse remarks or disclaimers made byP.C. Bindal & Co. Chartered Accountants Statutory Auditors in their Audit reportand by Mr. Satyendra Sharma Company Secretary in Practice in his Secretarial AuditReport.

DISCLOSURES:

BOARD COMMITTEES:-

The Company has 3 Board Level Committees. All decisions and recommendations of theCommittees are placed before Board for information and approval. The role and compositionof these Committees including the number of meetings held during the financial year andthe related attendance are provided below:

A. Audit Committee

B. Nomination & Remuneration Committee

C. Stakeholders Relationship Committee.

A. AUDIT COMMITTEE

The composition quorum powers role and scope are in accordance with Section 177 ofthe Companies Act 2013 and the provisions of Regulation 18 of the SEBI (LODR)Regulations2015. Mr. Rakesh Kumar Agarwal Non -Executive Independent Director is the Chairperson ofthe Audit Committee. The other members of the Audit Committee include Mr. Ravi Kant Bansaland Mrs. Alka Agarwal. All the recommendations made by the Audit Committee were acceptedby the Board.

During the financial year ended March 31 2016 4 (Four) meetings of the AuditCommittee were held as follows:

Date

Committee Strength

No. of Members present

May 15 2015

3

3

July 21 2015

3

3

October 23 2015

3

3

February 04 2016

3

3

B. NOMINATION & REMUNERATION COMMITTEE

The composition quorum powers role and scope are in accordance with Section 178 ofthe Companies Act 2013 and the provisions of Regulation 19 of the SEBI(LODR)Regulations2015. Mr. Rakesh Kumar Agarwal Non -Executive Independent Director is the Chairperson ofthe Nomination & Remuneration Committee. The other members of the Nomination &Remuneration Committee include Mr. Ravi Kant Bansal and Mrs. Alka Agarwal.

During the financial year ended March 31 2016 2 (Two) meetings of the Nomination& Remuneration Committee were held as follows:

Date

Committee Strength

No. of Members present

May 05 2015

3

3

December 04 2015

3

3

C. STAKEHOLDERS RELATIONSHIP COMMITTEE

The composition quorum powers role and scope are in accordance with Section 178 ofthe Companies Act 2013 and the provisions of Regulation 20 of the SEBI(LODR)Regulations2015. Mr. Ravi Kant Bansal Non -Executive Independent Director is the Chairperson of theStakeholders Relationship Committee. The other members of the StakeholdersRelationship Committee include Mr. Rakesh Kumar Agarwal and Mrs. Alka Agarwal.

During the financial year ended March 31 2016 6 (Six) meetings of theStakeholders Relationship Committee were held as follows:

Date

Committee Strength

No. of Members present

May 06 2015

3

3

June 30 2015

3

3

September 30 2015

3

3

December 31 2015

3

3

February 012016

3

3

March 31 2016

3

3

? There were no pending share transfers/ investors complaints as on March 312016.

ATTENDANCE OF DIRECTORS

The detail of Directors attendance in the Board Meeting and their Committeesduring the F.Y. ended as on March 31 2016 and in the last AGM of the Company is asfollows:

The Companys Independent Directors meet at least once in every financial yearwithout the presence of Executive Directors or management personnel. Such meetings areconducted informally to enable Independent Directors to discuss matters pertaining to theCompan ys affairs and put forth their views to the Lead Independent Director. TheLead Independent Director takes appropriate steps to present Independent Directorsviews to the Chairman and Managing Director. One meeting of Independent Directors was heldduring the year i.e. on 2nd March 2016.

WHISTLE BLOWER POLICY & VIGIL MECHANISM COMMITTEE

The Company has adopted a Whistle Blower Policy and has established the necessary vigilmechanism as defined under Regulation 22 of SEBI Listing Regulations for directors andemployees to report concerns about unethical behaviour. During the year under review noemployee was denied access to the Audit Committee. The said policy has been also put up onthe website of the Company at the following link-. http://www.howardhotelsltd.com/otherreports/VIGILMECHANISMREPORT

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed herewith marked as Annexure IV.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014during the year under review no employee whether employed for the whole or part of theyear was drawing remuneration in excess of the limits set out in the said rules. Hencethe details required under the said Rules are not given.

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised. The full Annual Report including the aforesaid information is being sentelectronically to all those members who have registered their email addresses and isavailable on the Companys website.

CORPORATE GOVERNANCE

Pursuant to regulation 15(2) of Securities Exchange Board of India (Listing Obligations& Disclosure Requirements) Regulations 2015 provisions of regulation 27 i.e.Corporate Governance and para C D & E Of Schedule V of SEBI (LODR) Regulations 2015is not applicable to the Company as the paid up capital and net worth as on the last dayof the previous Financial year of the Company was Rupees 91132000 and Rupees 126035000respectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis of financial condition and results of operationof the Company for the year under review as required under Regulation 34 of SEBI (LODR)Regulations 2015 is given separately under the head "Management Discussion &Analysis Report" in Annual Report as Annexure-V.

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

N.A.

(a) the details of technology imported;

N.A.

(b) the year of import;

N.A.

(c) whether the technology been fully absorbed;

N.A.

(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and

N.A.

(iv) the expenditure incurred on Research and Development.

N.A.

C) Foreign Exchange Earnings & Outgo

March 312016

March 312015

Total Foreign Currency Earned

48.41

44.86

Total Foreign Currency Outgo (traveling)

0.00

0.63

CORPORATE SOCIAL RESPONSIBILITY

The Company has not constituted the Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013 as the said provision is notapplicable to the Company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and peaceful throughout the year in theCompany. The Directors wish to place on record their appreciation for the contribution ofthe workers and officers of the Company at all level.

DEPOSITORY SYSTEMS

As the members are aware the Company's shares are compulsorily tradable in electronicform. As on March 31 2016 83.67% of the Company's paid-up capital representing 7625638Equity Shares is in dematerialized form with both the depositories as compared to 83.14%representing 7558638 equity shares for the previous year ended March 312015.

The Board acknowledges with gratitude the assistance co-operation and encouragementextended to the Company by Central Government State Government Financial InstitutionsSEBI Stock Exchanges Custodian Regulatory/Statutory Authorities Registrars & ShareTransfer Agent and other related Department of Tourism. Your directors thank thecustomers client vendors dealers Companys bankers and other business associatesfor their continuing support and unstinting efforts in the Companys growth. TheBoard also wishes to place on record their deep appreciation for the commitment displayedby all the executives officers and staff resulting in successful performance during theyear. The company has achieved impressive growth through the competence hard worksolidarity cooperation and support of employees at all levels. Your Directors are alsothankful to the stakeholders shareholder and depositors for their continued patronage.